The auction of the brands, known for their trendy and affordable ready-to-wear garments, has generated close interest in part because of a dearth of similar assets of that size on the market, one of the sources said.

First-round bids submitted on Tuesday gave the three brands - partly controlled by France's richest man, luxury goods mogul Bernard Arnault - an enterprise value of more than 650 million euros ($880 million), the sources said.

A further bid was submitted by the Moulin family, which controls the Galeries Lafayette department store chain and is flush with cash after selling its remaining 50 percent stake in supermarket chain Monoprix, sources said.

The deal could include a cash injection into parent company SMCP, an umbrella structure created in 2010 to house Sandro, Maje and Claudie Pierlot when L Capital and Florac acquired 51 percent of its equity, split equally between them.

The remaining 49 percent remained in the hands of the two sisters who created Maje and Sandro, Judith Milgrom and Evelyne Chetrite respectively.

The transaction would allow the brands, which have about 500 stores combined, to pursue their worldwide expansion after sales growth of more than 20 percent in recent years.

It comes as market conditions for ready-to-wear show signs of improving, thanks to renewed consumer confidence in major markets such as the United States and China.

THE MONCLER MODEL

L Capital is backed by the No.1 luxury goods company LVMH (LVMH.PA) and Arnault, the firm's chief executive and controlling shareholder. Florac is controlled by Marie-Jeanne Meyer, a shareholder and former head of trading group Louis Dreyfus. Neither L Capital nor Florac returned calls seeking comment.

Carlyle and KKR both declined comment. A Eurazeo spokeswoman declined comment as did a spokeswoman for the Moulin family. Wendel declined to comment.

Eurazeo in 2011 made a foray into luxury, buying 45 percent of outdoor apparel group Moncler from Carlyle and other investors. If market conditions are auspicious, Moncler could seek a flotation this year, industry sources have said.

Sources said there was a diverse list of potential buyers, with some unidentified strategic players in the process in addition to the private equity firms.

Sales generated by the three brands are estimated to be more than 300 million euros, with earnings before interest, taxes, depreciation and amortisation of 60 million euros, the sources said.

Managers of the business have said in the past they aimed to grow total sales to 500 million euros by 2014 and turn the three fashion names into global brands.

Sandro, Maje and Claudie Pierlot have enjoyed strong growth in recent years by opening shops in Europe as well as in the United States and Japan and they are looking to continue expanding in Asia and America.